Swick Mining Services has decided to sell its surface drilling business and concentrate on underground mining in a move Managing Director, Kent Swick, says is a logical step for the company “aligned with our strategy”.
The Surface Reverse Circulation (RC) Drilling business is being sold to K-Drill Pty Ltd and K-Drill Equipment Pty Ltd.
The sale includes six surface RC rigs, associated equipment, inventory, personnel and contracts, with the transaction expected to complete in the March quarter of 2021.
Including the recent sale of a number of residual RC assets to other parties, Swick will receive total proceeds for its RC business and assets of around A$6.4 million ($4.8 million) in cash and will report a profit on sale of some A$1.2 million before tax, it said.
K-Drill is a new RC drilling company that will be specialising in providing high quality, safe and productive drilling solutions to the Australian mining industry, Swick said. It will be building on the foundations set by Swick and will be led by Managing Director, Brendan O’Shea, who is Swick’s current Business Development Manager.
The Surface RC Drilling business provides reserve definition and exploration drilling to clients and its sale enables Swick to focus on its core Underground Diamond (UD) Drilling business; a 70-rig fleet providing reserve definition and grade control drilling at producing mines. This business represents 96% of annual revenue, Swick says.
O’Shea said: “This opportunity will allow K-Drill to focus completely on surface drilling and we are pleased to provide clients with peace of mind in knowing that we will be bringing all current Swick RC employees and Swick’s existing robust operating systems to K-Drill, ensuring a smooth transition for existing clients.”
After the disposal of the RC division, Swick’s drilling revenue will be generated entirely by the company’s UD Drilling division. This division drills around 100,000 m/mth of core across four countries – Australia, USA, Portugal and Spain. It is on track to deliver a forecasted revenue of A$68-$70 million, with utilisation remaining strong with 13 rigs operating internationally, 25 in Western Australia (including two DeepEX rigs) and 20 across the rest of Australia in December 2020.
On top of the Surface RC drilling business sale, and in response to increased market demand, Swick has agreed to manufacture and sell its “world-class” GenII mobile drill rigs, it said. These rigs are the smallest footprint, but highest-powered mobile drill available on the market, according to Swick, with many unique features including a “world-class automation package”.
Four GenII rigs are currently under construction for two large global drilling contractors for use outside of Australia, Swick said.
In response to increased demand for drill rigs from both Swick’s in-house drilling division and expected interest by external customers, Swick is gearing up its engineering facility at its South Guildford, Western Australia headquarters, to meet this demand, it said.
Swick Engineering has appointed an experienced senior mechanical engineer for the role of Production Manger that will manage the engineering business and oversee the efficient builds and rebuilds of the GenII drills.